Has the American Economy Recovered?

obs are the single-most important indicator of an economy’s underlying health — or sickness, as the case may be. (And, just to be clear, that is the case here in the U.S.)

The American economy added 223,000 in June, or so the Bureau of Labor Statistics told us last Thursday.

To certain cheerleaders, “it was a Goldilocks report,” as one investment strategist told CNBC. “You still see strength from job creation.”

Guess it depends on your definition of strength.

I see no strength. I see weakness. And it’s that weakness that tells you why the Fed won’t raise interest rates in September, and why you want to begin repositioning some of your assets to Europe from America.

Numerous econ types have breathlessly been insisting that recent jobs reports are strong and that they are a sign of America’s newfound economic ascendancy. Even President Obama crowed about his economic programs that have rebuilt the American economy on a new foundation.

A new foundation is right … but some context is critical in parsing his spin-doctoring.

Obama’s “new foundation” is not a foundation of strength.

Decline of the American Economy

I went back through historical records, back before the global financial crisis revealed just how poorly managed America really is, and I pulled Bureau of Labor Statistics (BLS) employment data from two periods: the peak just before the global financial crisis in 2007 to 2008, and as of May 2015. I cross-referenced the data with other numbers the BLS publishes on average weekly earnings.

In short: Our American economy is not in a good way on the jobs front, which explains why nearly a decade into this supposed “recovery,” the American economy — our foundation — is not in a good way, period.

The data explains why you and I and so many Americans still feel something just ain’t copacetic in our economy. Some numbers … between the economic peak just before the global crisis and today:

We lost more than 200,000 jobs in Computer/Electronics with an average pay exceeding $71,300 a year, but added 265,000 jobs in Temporary Help paying $29,800 a year.

We lost 1.4 million manufacturing jobs paying more than $53,000 a year, but added 1.4 million jobs in Food Services & Drinking Places that pay $17,000 a year.

We lost 949,000 jobs in Durable Goods paying more than $56,700, but added more than 950,000 jobs in Social Assistance paying $28,340.

We lost a combined 343,000 jobs in Telecom and Publishing paying between $63,000 and nearly $77,000 annually, but added 332,000 in Home Health Care Services that pay $27,500.

BLS data is littered with numerous examples, all underscoring the same message. Meanwhile, the examples that counter these trends — high-paying job categories that have expanded — are exceedingly limited.

Thus, going through the list of job losses and job gains in the American economy, the message is not one of a new foundation of strength. It’s one of disappointment at how far we’ve actually sunk as a country. We’ve traded high-paying jobs for low-paying jobs, and that undermines the predominantly consumer-driven American economy.

So what if you’re creating 200,000-plus jobs a month? If the jobs you’re creating pay one-third to one-half to one-quarter the pay of jobs the American economy has lost, so what? The jobs Obama’s economy is generating are incapable of fueling or maintaining the middle class.

It explains why the average American consumer is so tepid. People have had to downscale their lives to make do with less income.

American Dream Out of Reach

We’re simply moving in the wrong direction as a country. We might like to think we’re the richest nation on the planet, and that the flame of the American Dream still burns hot. Alas, the jobs reality tells a different story.

Why is the middle class shrinking (as various studies have shown)? Why do a majority of Americans believe the American Dream is no longer achievable (again, various studies)?

The jobs data offers the answer: People who once earned enough money to fund their version of the American Dream are now barely making enough money to make a living, assuming they still have a job. The low-wage service industry is now populated by workers who know what it’s like to earn a middle-class wage — because they used to be those middle-class wage earners, and they’ve had to retrench.

That clearly impacts the consumer economy.

And it tells you why the Federal Reserve has been so slow to raise interest rates. The jobs market, despite adding oodles of jobs, is structurally weak beneath the headline data. That does not make for a robust economy — which is why we have not yet seen a robust American economy this deep into a recovery.

It’s also why the high-flying U.S. stock market has a comeuppance in the offing. U.S. stocks are overpriced, and a structurally weak economy is a very good reason to lighten your exposure here at home.

Instead, put money to work in European blue chips. Economies including Germany, the U.K, France, Italy, Spain and Ireland are all looking up, regardless of the temporary issues of Greece.

Consumer and business sentiment are on the rise. And stocks in developed European economies are still undervalued. That will change as investors begin transitioning out of overvalued American stocks and into equally developed economies where stocks are cheaper.

As a lifelong world traveler, Jeff Opdyke has been investing directly in the international markets since 1995, making him one of the true pioneers of foreign trading. He is Investment Director for The Sovereign Society and a weekly contributor to The Sovereign Investor Daily.